Milstein v. Security Pac. Nat. Bank

• Decision Date: 28 August 1972
• Citation: 27 Cal.App.3d 482,103 Cal.Rptr. 16
• Court: California Court of Appeals Court of Appeals
• Parties: Morris MILSTEIN et al., Defendants and Respondents, v. SECURITY PACIFIC NATIONAL BANK (formerly First National Bank), a National Banking Association, Defendant and Appellant. Civ. 39473.

Page 16

103 Cal.Rptr. 16

27 Cal.App.3d 482

Morris MILSTEIN et al., Defendants and Respondents, v. SECURITY PACIFIC NATIONAL BANK (formerly First National Bank), a National Banking Association, Defendant and Appellant.

Civ. 39473.

Court of Appeal, Second District, Division 1, California.

Aug. 28, 1972.

Lillick, McHose, Wheat, Adams & Charles, and Anthony Liebig and Douglas S. Westwater, Los Angeles, for defendant and appellant.

Fadem & Kanner and Gideon Kanner, Beverly Hills, for defendants and respondents.

THOMPSON, Associate Justice.

This is an appeal from an interlocutory order of the trial court decreeing, over the objection of appellant, beneficiary of a deed of trust, that $19,085 of a deposit in court in an eminent domain proceeding be distributed to respondents, trustors and landowners, and from a final order of apportionment decreeing that the entire proceeds of the condemnation award be distributed to respondents. We dismiss the appeal from the interlocutory order and affirm the final order of apportionment.

Respondents are the owners of commercial property in the County of Los Angeles. On April 19, 1965, they executed a deed of trust of the property to defendant Equitable Trust Company to secure an indebtedness of $50,000 to Security First National Bank, predecessor in interest to appellant Security Pacific National Bank. The deed of trust provides that respondents convey the subject real property in trust to defendant Equitable Trust Company 'FOR THE PURPOSE OF SECURING (1) Payment of the sum of $50,000.00 with interest thereon according to the terms of a promissory note or notes of even date herewith, made by Trustor, payable to the order of Beneficiary (Security First National Bank) . . .; (2) Performance of each agreement of Trustor herein contained; (3) Payment of any and all obligations now or hereafter owing from any Trustor hereunder to Beneficiary and secured by mortgage or deed of trust of real property. . . .' The printed portion of the deed of trust states in darker and larger print than its body, 'TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:'. There follow three numbered paragraphs obligating the trustor to preserve the property and maintain it in good repair including the duty 'To complete or restore promptly and in good and workmanlike manner any building or improvement which may be constructed, damaged or destroyed . . . and pay when due all costs incurred therefor . . .', to make all payments and perform all acts called for by the deed of trust, and to repay all sums 'expended hereunder' by the beneficiary or trustee. In the same larger and darker print, the deed of trust provides, 'IT IS MUTUALLY AGREED THAT:'. There follow printed paragraphs (4) through (19). Paragraph (4) reads in pertinent part: 'Should the property or any part thereof be taken or damaged by reason of any improvement or condemnation proceeding, . . . Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement in connection with such taking or damage. All such compensation, awards, damages, rights of action . . . are hereby assigned to Beneficiary, who may after deducting therefrom all its expenses, including attorney's fees, release any moneys so received by it or apply the same on any indebtedness secured hereby.'

In October 1969, the City of Los Angeles commenced an eminent domain action to acquire a ten-foot strip of the property, taking immediate possession and depositing $38,075 in court pursuant to Code of Civil Procedure section 1243.5.

The eminent domain proceeding involved the taking of the front of a building located on respondents' property. Pursuant to Code of Civil Procedure section 1243.5, respondents moved to withdraw the deposit to permit repairs on the building necessitated by the taking. Appellant, as the beneficiary of a deed of trust on the property, objected. After a hearing pursuant to Code of Civil Procedure section 1243.7(f), the trial court found, on substantial evidence, that the security of the deed of trust, then securing an unpaid balance of approximately $32,000, had not been impaired by the eminent domain proceeding and ordered $18,000 of the deposit distributed to respondents. On September 10, 1970, respondents filed a second application, this time to withdraw the remaining balance on deposit with the court. The application was granted over appellant's objection.

By stipulation of the parties, a judgment and final order of condemnation was entered on March 24, 1971, fixing the total award in eminent domain at $43,000, $5,915 more than the amount originally deposited by the condemnor. The condemnor deposited the additional sum in court. Appellant moved for an order of apportionment pursuant to Code of Civil Procedure section 1246.1. It presented no evidence that its security had been impaired or that it had been damaged by the taking. The trial court ruled that appellant was not entitled to any portion of the condemnation award and apportioned the entire amount to respondents.

On this appeal from the order of apportionment, appellant contends that it is entitled to a portion of the award equal to the unpaid balance of the loan secured by the deed of trust upon...